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Profits, dividends and industry restructuring: the Swedish paper and pulp industry between 1945 and 1977

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  • Lars Fredrik Andersson
  • Ann-Kristin Bergquist
  • Rikard Eriksson

Abstract

This paper explores the role of profit distribution in the restructuring of the Swedish paper and pulp (P&P) industry between 1945 and 1977. In addressing this issue, we will draw on the life-cycle theory and market imperfection arguments to examine whether the less profitable firms shared more of their profits as dividends, or remained on the market longer by reinvesting the majority of the profits. Our study shows that an increasing share of the profits was distributed to owners over time, and thus less profit was reinvested in industrial renewal. We find that the observed general upward trend in dividends can be attributed to the decline in profit and firm legacy, as firms in the Swedish P&P industry kept dividends up while reducing reinvestment as their profit margins decreased over time. Our study shows that the market imperfections related to capital taxation and investment funds increased rather than decreased dividends.

Suggested Citation

  • Lars Fredrik Andersson & Ann-Kristin Bergquist & Rikard Eriksson, 2016. "Profits, dividends and industry restructuring: the Swedish paper and pulp industry between 1945 and 1977," Scandinavian Economic History Review, Taylor & Francis Journals, vol. 64(3), pages 278-296, September.
    • Handle: RePEc:taf:sehrxx:v:64:y:2016:i:3:p:278-296
    DOI: 10.1080/03585522.2016.1223745
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    References listed on IDEAS

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    1. Morck, Randall K. (ed.), 2007. "A History of Corporate Governance around the World," National Bureau of Economic Research Books, University of Chicago Press, number 9780226536811, December.
    2. Baker, H. Kent & Singleton, J. Clay & Veit, E. Theodore, 2011. "Survey Research in Corporate Finance: Bridging the Gap between Theory and Practice," OUP Catalogue, Oxford University Press, number 9780195340372.
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